New Tax Relief Proposal Places Huge Burdens on Employers


Reform, reduce, eliminate … Three words we consistently hear tossed around over and over again when referring to property taxes. The problem is that all three of those words come at a huge cost to Pennsylvanians and Pennsylvania businesses.

The most recent proposal to eliminate property taxes does so by creating the Education Stabilization Fund (ESF). The ESF would be funded by four revenue sources. The first is an expansion of the state sales and use tax. The second would be an increase in the state sales and use tax rate from 6 percent to 7 percent. The third would be an increase in the state personal income tax from 3.07 percent to 4.01 percent. And the last revenue source would be a redirection of certain monies transmitted to school districts through the Property Tax Relief Fund, which is already in existence. Distributions to school districts from the ESF would be made by the PA Department of Education on a quarterly basis based on a formula that uses the district’s property tax collections from the previous year as the base year.

The proposed expansion of the state sales and use tax leaves nothing sacred. A new tax would be placed on goods, including all food and beverage items not currently taxed — all clothing, shoes and apparel that sell for more than $50; all magazines and textbooks; non-prescription drugs and other pharmaceutical items; caskets, burial vaults and markers for gravesites; all candy and snack food, including those items in vending machines; and the sale of horses delivered out of state and horses used exclusively for commercial racing; as well as all their bedding, feed, and grooming supplies. Most personal hygiene products, such as diapers, toothbrushes, toilet paper and toothpaste, also would be taxed. Plus, the purchase of state and federal flags and direct mail order catalogs.

Read more in the November 2013 edition of the Business Magazine.